An appellate panel reversal gives the cohort another fighting chance in federal court.
The Michigan man who has waged court wars over various cannabis social equity programs’ residency rules around the country has been handed a temporary victory in California.
The U.S. Court of Appeals for the Ninth Circuit on Monday reversed a lower court’s decision that had previously sidestepped a lawsuit by Peridot Tree Inc. – a company with majority ownership by Michigan resident Kenneth Gay – challenging Sacramento’s cannabis licensing program’s residency requirements.
The company argued against the city’s Cannabis Opportunity Reinvestment and Equity (CORE) program, claiming its stipulation that participants must be current or former Sacramento residents was unconstitutional under the dormant commerce clause of the U.S. Constitution.
The dormant commerce clause typically prohibits state legislation that discriminates against or excessively burdens interstate commerce. In this case, Peridot Tree contended that Sacramento’s residency requirements for cannabis licensing unfairly restricted out-of-state economic participants, thereby breaching federal law.
Previously, U.S. District Judge Kimberly J. Mueller had abstained from taking on the case, deferring instead to state court proceedings due to the federal illegality of marijuana and the perceived complexities involved. She cited various Supreme Court doctrines of abstention, which traditionally allow federal courts to refrain from deciding cases that touch on intricate state regulatory schemes or ambiguous state laws.
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